Snapshots of the 2008 crash, 4 years of Education
In 2008, after 5 years of outgrowing space and adding trucks barely in time to keep clients, and after outsourcing hundreds of thousands of pounds of shipments to other companies because I didn't have the space to do it "in house", I got a tremendous opportunity. Next month will be "graduation", the end of 4 years of this wonderful opportunity.
We were paying roughly $8K per month to rent 1/3 of a plastic factory, which was still producing. Another tenant was renting 1/4 the space from the plastic company for $9K per month.
The plastics company went out of business, and the mortgage on the building was available for roughly $15k per month (quite roughly). I had an opportunity to take over 100% of the place, meet half the mortgage through the other renter, double my space, and be paying into equity rather than just a rent check. It took 5-6 months to get the loan approved, to empty college funds, put my house on the line, and borrow from family. It was about $330K down, and we bought the whole enchilada in late October, 2008.
Crash... What was that? That was the banks, the stock market, everything hitting the fan a few weeks later.
By the end of December 2008, the other renter was in chapter 11 and the value of our plastic and metals scrap was at a pre-World War I low. I really honestly thought we may be cooked in our own broth.
We survived. I made nothing. I lived off my wife's salary. We didn't pay overtime, we cut benefits, and staff stayed on because there were no other jobs available. Middlebury's Specialty Filaments, Standard Register, and CPC Plastics (our former landlord) closed and layed off 100% of the staff.
Other than to myself and my family, we met our obligations. The bottom of our canoe scratched painfully across the rocks, but we kept moving. I had to now produce for all 50,000 s.f. of the overhead. We got a line of credit from SBA and used every penny and made minimum repayments. Our bank itself went under and was taken over by another bank.
That year, one of our largest e-waste competitors in New England told all our clients that they had a grant with Samsung, and that all their recycling would go away for 1 cent. I asked if I could deliver our material there, and the competitor said "not in our trucks", the client had to go to them. I delivered material to them for 6 months under an agreement that the grant would go away after 6 months, and at the end of the 6 months, they offered to renew the Samsung grant and keep the material going for free.
I'd probably been the chief person killing the "stewardship" legislation up until 2010, but by 2010 the clients wanted more of that "free" collection, and the bill passed. I figured we just had to hold on one more year... then hopefully we'd win the contract to service our Vermont clients for cheaper than the out of state competitors grant.
Next: Exporters and Legislative Subsidy Junkies... Can't Beat 'Em? Join Em!
In 2008, after 5 years of outgrowing space and adding trucks barely in time to keep clients, and after outsourcing hundreds of thousands of pounds of shipments to other companies because I didn't have the space to do it "in house", I got a tremendous opportunity. Next month will be "graduation", the end of 4 years of this wonderful opportunity.
We were paying roughly $8K per month to rent 1/3 of a plastic factory, which was still producing. Another tenant was renting 1/4 the space from the plastic company for $9K per month.
 |
| View from 5000 feet... and falling |
Crash... What was that? That was the banks, the stock market, everything hitting the fan a few weeks later.
By the end of December 2008, the other renter was in chapter 11 and the value of our plastic and metals scrap was at a pre-World War I low. I really honestly thought we may be cooked in our own broth.
 |
| Beautiful enough to sleep in |
Other than to myself and my family, we met our obligations. The bottom of our canoe scratched painfully across the rocks, but we kept moving. I had to now produce for all 50,000 s.f. of the overhead. We got a line of credit from SBA and used every penny and made minimum repayments. Our bank itself went under and was taken over by another bank.
That year, one of our largest e-waste competitors in New England told all our clients that they had a grant with Samsung, and that all their recycling would go away for 1 cent. I asked if I could deliver our material there, and the competitor said "not in our trucks", the client had to go to them. I delivered material to them for 6 months under an agreement that the grant would go away after 6 months, and at the end of the 6 months, they offered to renew the Samsung grant and keep the material going for free.
I'd probably been the chief person killing the "stewardship" legislation up until 2010, but by 2010 the clients wanted more of that "free" collection, and the bill passed. I figured we just had to hold on one more year... then hopefully we'd win the contract to service our Vermont clients for cheaper than the out of state competitors grant.
Next: Exporters and Legislative Subsidy Junkies... Can't Beat 'Em? Join Em!
No comments:
Post a Comment